Industrial-scale bitcoin mining facilities in the US create as much carbon pollution as 3.5 million gas-powered cars, and Texas, which boasts the largest number of mining facilities in the country, will see the cost of electricity rise nearly 5% by mid-2023 due to cryptocurrency mining.
Those stunning figures come from analyses by tech nonprofit WattTime and energy consultancy Wood Mackenzie for a New York Times investigation into the rise of large-scale bitcoin mining in the US.
Bitcoin miners operate large arrays of computers that are paid fees to solve the cryptological problems that allow the currency to maintain a decentralized database of all its transactions. The investigation found 34 mining operations, each drawing more than 40 megawatts of electricity; many of them were started in the US after China banned the activity there in 2021, partly due to concerns over power usage.
Ironically, many of the mines were able to profit from agreements with electrical grids to pause their operations during emergencies. Systems to reward large electricity users that commit to shutting down when the grid is strained, whether they actually do or not, predate the bitcoin miners, but participating in them added tens of millions of dollars to their aggregate bottom lines.
Is bitcoin too big for Texas?
Texas, which governor Gregg Abbott wants to be a “crypto leader,” has seen major stress on its grid in recent years, particularly rolling blackouts in February 2021 and a failure in 2022 that left 70,000 people without power.
The additional load created by the miners, equal to tens of thousands of new homes, as well as their participation in incentive programs, increased the cost of electricity by nearly 5% across the state and by as much as 9% in some West Texas communities.
Riot Platforms, the largest miner discussed in the New York Times story, said it paid 2.96 cents per kilowatt-hour of electricity in Texas in 2022. Other industrial power users in the state paid 7.2 cents, while residents paid 13.5 cents.
Bitcoin proponents say that other industries aren’t judged on their electricity usage, and that they don’t have a say in how the power they buy is generated. But grid experts say their constant demand for power makes bitcoin mines more reliant on plants that burn fossil fuel.
The other question is whether their benefits match the costs: While most forms of power usage offer some obvious added value, the jury is still out on what kind of advantages bitcoin and other cryptocurrencies offer society besides an opportunity for speculation.
Unlike other industrial power users, which typically generate jobs and products, bitcoin mines employ few people, and the gains from the currency largely accumulate for insiders. The price of a bitcoin has risen 76% this year to nearly $30,000, but it is still more than 50% off its peak value in 2021 after the collapse of FTX and disillusionment with the idea of “Web3.”